September 2024
Financial Planning

Starting Young – Roth IRA Accounts for Minor Children

By Myra Alport


A frequent question we get is from parents who want to give their children a head start on their financial journey well before they reach adulthood. Perhaps they are a summer camp counselor, lifeguard, babysitter, lawn mower, dog walker, lemonade stand proprietor or retail salesperson, for example.

Starting early with a minor Roth IRA can set them up for long-term financial success along with lessons of financial responsibility, saving, investing and tax-free growth down the line.

The key factor for anyone (adult or child) to contribute to a Roth IRA is having earned income. In the case of minors, if no “paycheck” or W-2 is issued, then maintaining an accurate record of any earnings will satisfy questions from the IRS.

Here are the highlights:

Account control

Money in the account belongs to the child, with the adult acting as custodian until the child reaches the age of majority in their state of residence (between 18-21) at which point the assets are transferred to the child and they assume complete control over the account.

Child Eligibility

The child must be under the age of 18 and have employment income.

Contribution & Gifting Limits


The contributions cannot exceed the minor’s earnings (if a minor earns $1,000 then only $1,000 can be contributed to the account for that year).

2024 maximum contribution is $7,000

Investment Options

Stocks, bonds, mutual funds, ETFs, CDs

Withdrawals & Taxes

Contributions can be withdrawn at any time without tax or penalties. Withdrawals beyond contributed amounts (ie, earnings) are taxable unless they meet certain IRS rules. Please reach out to your advisor to find out if a minor Roth IRA makes sense for your family member.


The best time for their kids to start investing? The sooner the better!

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